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Exclusive Interview with Tsai Ing-wen

Taiwan's presidential election may have concluded, but her journey continues. She carries with her 6.09 million votes, many pairs of comforting hands and innumerable tight hugs that have left such deep emotional ties and a sense of unfinished business that she cannot turn away, even if she has stepped down as chairwoman of the Democratic Progressive Party (DPP).

"To me, even though the election is over, I'm still winding things down," Tsai Ing-wen told CommonWealth Magazine on March 12, in her first interview since losing the presidential election on Jan. 14 to President Ma Ying-jeou of the Kuomintang.

"I still have the responsibility to hold together the team and make sure they continue to have confidence," she says frankly.

In the eyes of political pundits, Tsai's approach is geared toward amassing even more energy in support of a second presidential bid in 2016. One of the clues supporting their view: Tsai's use of her surplus campaign funds to open her own office.

Responding to questions about her role in the 2007 TaiMed case – in which she was accused by her rivals during the campaign of a conflict of interest that netted her family excessive gains – Tsai insisted on clarifying her role in detail, which could be interpreted as an attempt to clear the political battlefield of any lingering issues that could resurface in 2016. She may have also simply been defending her innocence, but in doing so, the implication was still clear: Tsai can reassume her battle position and fight again at any time.

The considerable speculation over her future reflects the high expectations people still have of Taiwan's first female presidential candidate.

When asked about 2016, Tsai responds with a coy grin, leaving herself plenty of maneuvering room for the future.

Following Tsai's resignation, the DPP named Kaohsiung mayor Chen Chu as acting chairwoman, but it will be without a permanent leader until it elects one, presumably in May. Until then, Taiwan's major opposition party will be at its most fragile and least stable.

That has been evident in the DPP's somewhat lackluster response to the controversy over allowing imports of American beef containing residues of the leanness-enhancing drug ractopamine. A public that felt dissatisfaction with the government's handling of the issue also questioned whether the DPP had gone soft.

But Tsai argued that the party showed maturity in understanding that any government in power would be under pressure on the issue and therefore opted not to indiscriminately oppose the move as it might have in the past. Instead, Tsai said, the DPP is determined to work through official procedures, to debate the issues, and to provide oversight of the ruling party.

When asked about what kind of characteristics the new DPP chairperson should have, the former DPP chairwoman held back, insisting on not wanting to interfere with the election for party leader. "But I often tell members of the party's younger generation that they need to make decisions, take on responsibility, and create a greater common good."

Though Tsai prefers it when people call her "Professor Tsai," she clearly understands that her political titles of "DPP chairwoman" and "presidential candidate" will never go away, making it unlikely that she will ever be known again as simply "Professor Tsai."

So how does Tsai see the DPP's future? And how should the DPP engage with China? What in fact was her role in the TaiMed case?

Here's what she told CommonWealth Magazine.

Q: The DPP released a report examining the factors behind your election defeat. In it, you acknowledge that your own leadership and election strategy were inadequate, leaving voters with a lack of trust in the party. Could you explain this in more detail?

A: The DPP's performance in recent years has not met the expectations of independent voters. But we also can't deny that the DPP has become more mature and more stable over that time. It has evolved from a party involved in social movements during its early days into one concerned with public issues and connected to values related to social justice.

But we also have to admit that after 2008, for a losing party to start anew, it had to shoulder many tasks in a short four years. It needed to use successive elections to build energy and momentum while also developing a new public agenda to help it become a party seen as caring about society and the country. That resulted in the postponement of major reforms that were needed internally.

A leader is responsible for a party's development by setting priorities and deciding which ones to emphasize.

Where we came up short generally involved not spending the time needed to handle issues requiring follow-up. For example, the party's image needed to be strengthened. As the challenger, we needed to have a better social image and greater public trust than the incumbent to win support.

Q: Some people believe that if the election system is not changed, and the KMT and DPP continue to have unequal campaign arsenals, Taiwan's party politics will have evolved as far as they can. Where do you think the future of the DPP lies?

A: In this election, we were relatively short of resources. We faced an extremely unequal situation in every area, whether it was the media, publicity or organization. But we were still able to get 6.09 million votes, or nearly 46 percent of the votes cast, which reflected growth.

The next major challenge for the DPP is to prevent the growth momentum from coming to a halt. Whether the party gets a new leader, or a new leadership structure emerges, if the leadership structure is stable and the momentum continues, I think the DPP still has a promising future.

Also, society needs to examine the situation. Why is it that society can still tolerate political parties having such unequal resources in an election in a democratic society?

DPP Should Get Closer to China

Q: You previously said that the DPP needs to better understand China. Does this mean you believe that the DPP needs to adjust its political line? What kind of changes should the DPP make to its cross-strait approach and position?

A: I didn't mean that the DPP's line or position was in some way wrong. In fact, in this election, I first raised the idea that Taiwan is the Republic of China and the Republic of China is Taiwan. Although some people within the DPP did not agree, polls showed that most people supported the concept, which indicates that the DPP does not have a problem with its line or position. The greatest consensus in Taiwan is to maintain the status quo. But maintaining the status quo does not mean standing still, because the outside world is changing, and China is only getting stronger. In addition, Taiwan is a society in transition from the past to the future.

A society in transition trying to maintain the status quo while facing a China in transition – this relationship is dynamic. Not only are both sides moving, the global situation is also changing.

To deal with this dynamic situation, a stronger foundation and more mature problem-solving abilities are necessary. That's a challenge any government in power must confront.

Maybe from the KMT's perspective, the "1992 consensus" can resolve problems for the time being. But because it is a fictitious construction, it won't be strong enough to support the burden of such huge cross-strait changes in the future.

I also have to admit that we did not have enough time during the election to explain our "Taiwan consensus," which limited the opportunity for its interpretation and maturation.

There is one other very important cornerstone (along with maintaining the status quo and equating the Republic of China and Taiwan): Taiwan's 23 million people have the right to decide our future.

The "Taiwan consensus" is the will power that is gradually coalescing in society, based on these three cornerstones.

Q: But on the China issue, aside from a consensus, capabilities and exchanges are also needed. The DPP has had very limited contacts with China in the past, leaving people thinking that the party had an insular approach toward China and lacked understanding of the issue. How can this be overcome?

A: The DPP has had exchanges with China. It's just that like with the KMT, high-level leaders cannot go there. So you have to rely on the experience of your own people, gather all necessary information, and rely on the judgment of experts to develop a policy.

I hope that in terms of attitude, the DPP can more actively address this issue. It should not fear triggering an internal battle over the party's line or worry about falling prey to China's united front tactics.

Experienced negotiators know that it's important to accumulate bargaining chips. You need to get close to your opponent to know where your bargaining chips are and where to anchor yourself and find pressure points.

'I Don't Remember Signing that Document'

Q: Do you think you handled the TaiMed controversy the right way during the campaign? Did it have an impact on the election result?

A: The polls we conducted during the race did not reflect any change in our level of support. Those who believed us continued to believe us, and those who didn't ended up never believing.

So my campaign felt that considering the massive publicity and media coverage related to the case, it would have required a time-consuming battle to fight the issue. However, I later looked back and thought that as a candidate, you have to face many people and questions, and with time and resource constraints, more actively confronting the issue may have been a better strategy.

Q: Many people in society question whether you avoided a conflict of interest, because as vice premier you approved the National Development Fund's investment in TaiMed Biologics and then you went on to become the company's chairwoman.

A: At the time, the government's policy was geared toward attracting a major pharmaceutical company to invest in Taiwan. I first came across this case in the Executive Yuan on Feb. 9, 2007, when (Council for Economic Planning and Development chairwoman) Ho Mei-yueh presented an official document to the premier for approval. The document was related to the pursuit of Genentech's authorization to develop a new drug.

As vice premier, what I was looking at was the rationality of the policy. Genentech was the world's biggest pharmaceutical company, and the document authorized Academia Sinica president Chi-huey Wong to negotiate with Genentech.

Because the official document made sense, I signed it. When I approved the document, "TaiMed Biologics" didn't even exist yet, and I wasn't interested in getting involved in such a company. I was simply fulfilling my policy role, and I approved the document based on my judgment as vice premier that the official document was reasonable. Then, on March 21, Ho presented a second document that was a progress report. In my mind, I signed two official documents at the time: one was the authorization; the other was the progress report. I am not completely clear about what happened after that.

Only at the end of August (after stepping down as vice premier) when TaiMed Biologics was established did I decide to become the company's chairperson, so there is no question of my having approved something for my own benefit.

Actually, when the decision was being made, I really don't remember signing that official document (which authorized the National Development Fund to invest in TaiMed Biologics). But I was very careful. I asked both the deputy secretary-general of the Executive Yuan and the head of the Directorate-General of Personnel Administration whether my actions violated revolving door regulations or constituted a conflict of interest, and their answers were "absolutely not."

(In Taiwan, revolving door regulations prevent public officials from taking positions with companies that they previously supervised within three years after leaving the public sector.)

Biotech Act Academia Sinica's Brainchild

Q: At the time, were you aware that Taiwan Biopharmaceuticals Co. was applying for funding from the National Development Fund to develop a similar drug (to the one from Genentech that Taiwan wanted to develop)? Later, TaiMed Biologics is believed to have taken over Taiwan Biopharmaceuticals. How do you see that?

A: The Taiwan Biopharmaceuticals case began in 2005, but I am really not familiar with the ins and outs of the decision-making involved. I was worried that my memory had failed me, so I asked Ho Mei-yueh, who headed the Council for Economic Planning and Development (CEPD) at the time, and others about it. They said there was nothing there because the Taiwan Biopharmaceuticals case involved an investment in pharmaceutical manufacturing, while the TaiMed case involved the development of a new drug. The two cases were different. Had the Taiwan Biopharmaceuticals case gone through me, the KMT would have made it public early on.

Q: Some people suspect that the reason you pushed for passage of the "Act for the Development of the Biotech and New Pharmaceuticals Industry" was to pave the way for your later involvement with TaiMed Biologics.

A: In May 2007, I stepped down as vice premier. At the end of May, I had a chat with President Chi-huey Wong. He said he wanted to push the new biotech law to help break through bottlenecks in the development of new drugs in Taiwan. I thought this was a good thing, and everybody pitched in.

This act was drawn up by Academia Sinica, and the opinions of (then National Science Council chief) Chen Chien-jen and Ho Mei-yueh were then added. I felt the law would benefit the country and believed the (pro-KMT) blue camp and (pro-DPP) green camp should submit the bill together. But if either the blue camp or the green camp submitted it, it would have become the object of partisan wrangling, so I brought Wong and Chen to visit legislative speaker Wang Jin-pyng, who had long been interested in the development of the biotechnology sector, and suggested that he back the bill.

The biotechnology act was passed in June 2007. It was only after I went to the United States in July that scientists lobbied me to get involved in biotech development. TaiMed Biologics was only formed in late August, so the law was absolutely not tailored for the creation of TaiMed.

Q: Another key point in the TaiMed case is that standard procedures do not seem to have been followed. The CEPD approved the National Development Fund's investment in TaiMed through a highly classified document in only six days, and the money was disbursed seven days later. Also, the biotech law made it through the legislature in only nine days. How do you explain these irregularities?

A: This has to be divided into two parts. One is administrative procedure. One is this case's special characteristics. What are standard administrative procedures? How do National Development Fund procedures work? And also legislative procedures – none of these were within my jurisdiction.

The administrative process moved so quickly because of the authorization case's special nature. Genentech expressed its intention in the second half of January to release a patented technology, and because it involved competitive bidding, the case was classified as top secret. After the project was approved by the Executive Yuan, there were problems with fundraising, and the plan nearly fell through. Only after I returned from the United States in August was I informed of a new opportunity for negotiations.

The funds were disbursed quickly after the issue was discussed anew in mid-August, but I only decided in the latter half of the month to chair TaiMed and began to set up the company. Genentech gave us an ultimatum to complete the negotiations and sign the deal by the first week of September.

So the company needed to be incorporated very quickly. From the fundraising and disbursement of funds by the National Development Fund to the establishment of the company, the entire process had to be compressed into two weeks.

Q: You have previously said that your family's investment in TaiMed was needed to rescue the company, but why did it have to be the Tsai family? Also, the Tsai family invested in TaiMed Biologics through another company called TaiMed Inc. (that was formed on Sept. 3, 2007). Then TaiMed Inc. applied to the National Development Fund for an injection of funds into TaiMed Venture Capital. The National Development Fund paid an advance of NT$1.32 billion to cover management fees, feeding suspicions that arrangements were made to profit the Tsai family. How would you describe the role of the Tsai family in the investments made in the TaiMed case?

A: From the time the project was approved on Feb. 9 to the progress report on March 21, people were already involved in raising funds but weren't successful. In August, they once again approached those people who said previously they were interested in investing, but still could not come up with the necessary funds.

But the company urgently needed to be set up, and seeing no other way, I approached my older brother and persuaded him with some difficulty to get involved by first setting up TaiMed Inc. and then having TaiMed Inc. invest in TaiMed Biologics. But TaiMed Inc.'s board members were not from our family, an indication that he (Tsai's older brother) was not interested in the company's operations. He was simply putting up money. So I said openly that as soon as private capital came in, we would pull out.

Based on the suggestions of scientists, TaiMed Inc. would form a biotechnology investment platform, to invest in the research and development of new drugs and medical devices. To be successful, it needed venture capital, so we proceeded with the plan to form TaiMed Venture Capital. The move was welcomed by prestigious members of the domestic business and academic communities, who served as conveners of the technical and management advisory committees under the team managing the venture capital company's fund. They also applied to the National Development Fund for a capital injection.

When we filed the application with the National Development Fund, the planned size of the venture capital fund was NT$6 billion, but it was later revised to NT$3.5 billion. Within this sum, the NT$1.32 billion originally budgeted for operating and management expenses was revised to NT$740 million, with the remaining NT$2.76 billion to be used for investments.

The NT$740 million was put in a trust account for the purpose of paying those managing the fund in regular installments. Any interest earned was to go to the company.

In the business community, this kind of venture capital model is very common. Because investing in the biotechnology industry carries high risk, with the payback period relatively long, if funds are completely allocated to investments, there is no way to guarantee that management fees will be covered on schedule.

But I'm a little angry over this part, because after the KMT took power (in 2008), the Executive Yuan confirmed this project. After we pulled out, the Executive Yuan then promoted the Taiwan Biotech Take-off Diamond Action Plan, which also involved a venture capital fund that included pretty much the same group of people. But there were those who implied that my family took NT$1.3 billion, and at the time we were not able to clear this up with the public.

Q: You stepped down as vice premier in May 2007 and took over as TaiMed chairperson in August, but in December you still called officials to your home to brief you on the review of the venture capital situation. This process left society with a very negative impression.

A: We set up a company in a very short period of time. The company was registered at the address of the law firm we used, but the scientists had many different opinions about where the actual office should be located. In the end, we found a place, but time was needed to decorate it. So before the office was ready at the end of December, my house was used as the company's office. Contracts were signed and board meetings were all held in my home.

The National Development Fund was an investor. I was the chairperson, and I was in my company's "office" exchanging views with an investor. Is there anything wrong with that? This situation can withstand public scrutiny. There are many events that have been misconstrued because they've been taken out of their chronological order, but if you follow the timeline, everything can be understood.

No More Conservative in the Future

Q: You stressed that becoming the chairperson of TaiMed Biologics did not violate revolving door regulations, but in doing something that may have appeared suspicious, do you think you showed a lack of political judgment?

A: I don't think this is a problem of political judgment, because, honestly, from the beginning to the end, I was not acting as a political person.

When I took over as head of TaiMed Biologics, it was completely because I was moved by appeals from the scientists involved. Then, with the time frame so tight, had I not agreed to the move or had my family not put up the money, the partnership with Genentech may have crumbled. I took the responsibility and risk out of consideration of the overall good and to promote biotechnology development. Maybe I've always done things based on a sense of mission without worrying about the political consequences. Only after I became the head of the DPP did I become more political.

In all honesty, I have no regrets, because this was something that benefited the country. If I had the chance, I would do the same thing again. I will also not become any more conservative in my approach in the future because of this. To be a political leader, you truly need to have courage, but you also have to know how to protect yourself.

Q: After stepping down as head of the party, what is your next step?

A: I'm still visiting different groups of supporters and thanking them for their votes. In this election, our supporters gave their money, their effort and their emotions to the campaign, so what I'm doing now is thanking them. I also feel I've really let them down. But as a candidate, I still have the responsibility to hold together the team and make sure they continue to have confidence. That's what's keeping me busy now. As for other things, we'll see about them in the future.

Q: Without a specific position, how will you keep the team together in the future?

A: I will make an effort to do things the DPP cannot do, such as connecting more with society. When I headed the party, there were constraints. The DPP's support base is composed mainly of people at the grassroots level. We need greater inclusion of intellectuals, and stronger ties need to be built with other social organizations.